Three months of political turmoil in
Thailand is starting to benefit neighboring economies, as fund
managers pull money from the country, long-term investments are
reconsidered and tourists avoid Bangkok.
Foreign investors have withdrawn $3 billion from Thai
stocks since protests began Oct. 31, exchange data show. They’ve
put $190 million into Indonesian shares in 2014 even after the
Jakarta Composite index fell 3.9 percent in two days through
Jan. 27 amid an emerging-market selloff.
Thailand has fared relatively worse than Southeast Asian
neighbors as global investors shift money from emerging markets
amid the Federal Reserve’s plan to cut stimulus. Thai Prime
Minister Yingluck Shinawatra declared a state of emergency in
Bangkok on Jan. 22 after protests aimed at toppling her
intensified, and the government cut its 2014 growth forecast
twice in a month. Long-term investors may consider countries
including Indonesia and Vietnam because of the unrest, Toyota
Motor Corp. Thailand President Kyoichi Tanada said last week.
“The rotation from Thailand to Indonesia makes sense as we
would expect Indonesia to relatively outperform,” Mixo Das, an
Asia ex-Japan equity strategist at Nomura Holdings Inc. in Hong
Kong, said in an e-mail interview yesterday. “Thai growth
fundamentals will be much weaker given a lack of investment and
ongoing political uncertainty weighing on investor sentiment,”
he said, adding that he would use the opportunity from a relief
rally in Thai stocks to shift funds to other markets.
English tourists Marco Barron, left, Scott Haywood, center, and Connor William chat… Read More
English tourists Marco Barron, left, Scott Haywood, center, and Connor William chat beside market stalls outside the Siam Center shopping mall in Bangkok on Jan. 17, 2014. Arrivals to Thailand will fall by half to 1 million this month, Minister of Tourism and Sports Somsak Phurisisak said Jan. 23 in Bangkok. Close
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Photographer: Dario Pignatelli/Bloomberg
English tourists Marco Barron, left, Scott Haywood, center, and Connor William chat beside market stalls outside the Siam Center shopping mall in Bangkok on Jan. 17, 2014. Arrivals to Thailand will fall by half to 1 million this month, Minister of Tourism and Sports Somsak Phurisisak said Jan. 23 in Bangkok.
Growth Slows
The Thai finance ministry cut its 2014 growth forecast to
3.1 percent on Jan. 16, after lowering it to 4 percent from 5.1
percent on Dec. 26. That compares with estimates of 5.4 percent
expansion in Indonesia, 5 percent in Malaysia and 6.4 percent in
the Philippines, based on Bloomberg surveys of economists.
Thai shares saw the biggest withdrawals by overseas
investors among Southeast Asia’s emerging markets on Jan. 27 as
slowing growth in China, a devaluation of Argentina’s peso and
the prospect of further reductions in U.S. stimulus spurred
outflows from developing-nation assets.
Foreign funds pulled $102 million from Thai stocks, $80
million from Indonesia and $34 million from the Philippines,
exchange data show. Figures from Malaysia were unavailable.
Asian stocks rallied today after Turkey more than doubled
interest rates to stem capital outflows. The JCI led regional
gains, advancing 1.3 percent as of 10:03 a.m. in Jakarta,
according to data compiled by Bloomberg. Thailand’s SET gauge
rose 0.3 percent.
Soldiers stand stationed atop the Chidlom intersection as morning commuters walk past… Read More
Soldiers stand stationed atop the Chidlom intersection as morning commuters walk past in Bangkok on Jan. 17, 2014. Close
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Photographer: Dario Pignatelli/Bloomberg
Soldiers stand stationed atop the Chidlom intersection as morning commuters walk past in Bangkok on Jan. 17, 2014.
Bond Flows
Indonesia’s benchmark share gauge will probably rally as
much as 20 percent by year-end as a weak rupiah boosts exports
and election spending supports consumer and media companies,
Alvin Pattisahusiwa, who oversees $3.3 billion as chief
investment officer at PT Manulife Asset Management Indonesia,
said in an interview in Jakarta yesterday. The nation will vote
for a new legislature in April and a president in July. The
rupiah fell 21 percent last year, prices from local banks show.
Some $1.4 billion has been removed from Thai debt since
Oct. 31, according to data from the Thai Bond Market
Association. That compares with inflows of 11.43 trillion rupiah
($932 million) into Indonesian local-currency notes over the
same period, finance ministry figures show.
“There is a general outflow from emerging markets, but
it’s probably been more pronounced in Thailand,” Igor Arsenin,
Barclays Plc’s Asia head of emerging-markets rates strategy,
said in an interview yesterday, referring to bonds. “Whether
it’s just temporary risk aversion or it’s a more permanent
reduction of inflows into Thailand is a bit too early to say.”
Thailand expects a drop in tourist arrivals, which could
benefit other countries in the region, said Robert Hecker,
Singapore-based managing director of hotel consultant Horwath
HTL Asia Pacific. Tourism contributes about 10 percent to the
country’s gross domestic product.
Tourism, Investment
Arrivals to Thailand will fall by half to 1 million this
month, Minister of Tourism and Sports Somsak Phurisisak said
Jan. 23 in Bangkok. Advance bookings have been crimped by travel
warnings from countries such as China, Malaysia, Australia, the
Philippines and the U.S., whose authorities have warned citizens
to avoid Bangkok’s protest hot spots.
“There would definitely be people in the leisure market
who would look elsewhere, so it could benefit other markets,”
Hecker said in an interview last week. Tourists may opt for
destinations where you don’t need a visa or can get one on
arrival, such as Indonesia and Malaysia, he said.
Toyota’s Tanada said that while existing investors in
Thailand are unlikely to relocate because of the political
situation, it may affect the future level of investment and new
investors may consider other Southeast Asian countries.
Indonesian Opportunity
This is an opportunity for Indonesia to lure more foreign
investment to its automotive industry, Johnny Darmawan,
president director of PT Toyota Astra Motor and co-chairman of
Gaikindo, the nation’s automotive industry association, said in
a Jan. 27 interview in Jakarta.
“We have already heard that some investors are considering
moving their business to Indonesia from Thailand,” Jemmy Paul,
an equities fund manager at Sucorinvest Asset Management in
Jakarta, said in Jan. 24 interview. This could benefit
industrial-estate stocks in Indonesia, he said.
Nissan Motor Co. (7201) said the situation in Thailand wouldn’t
affect its investment decisions, Chris Keeffe, a Yokohama-based
spokesman, said in an e-mailed response to questions yesterday.
Honda Motor Co. isn’t looking for any alternatives to Thailand,
Yuka Abe, a Tokyo-based spokeswoman, said in a Jan. 27 e-mail.
History of Unrest
The MSCI AC Asia Pacific excluding Japan Index or regional
shares has dropped 7 percent since the end of October, when the
protests started in Thailand. Over the same period, the Standard
Poor’s 500 Index (SPX) has rallied 2 percent.
“Emerging-market ASEAN equities as a whole have only
mildly benefited from the Thai political turmoil,” Nomura’s Das
said. “This is because at that time, concurrent to the Thai
crisis, the global appetite for emerging-market risk was
weakening,” he said, adding that some of the outflows from
Thailand may have gone to South Korea, Taiwan and Singapore.
Thailand has had nine coups and more than 20 prime
ministers since 1946. In the last few years, the country has
been beset by clashes between supporters and opponents of former
Prime Minister Thaksin Shinawatra, Yingluck’s brother. The
country’s main airport was shut for almost two weeks in 2008 and
protests turned inner Bangkok into a war zone in 2010.
“It’s not the first time this has happened,” Arsenin at
Barclays said. “What’s damaging is perceptions, investment and
tourism. It’s all reversible at the moment, but as time goes by
some of it will become permanent.”
To contact the reporters on this story:
Andrew Janes in Jakarta at
ajanes@bloomberg.net;
Harry Suhartono in Jakarta at
hsuhartono@bloomberg.net;
Liau Y-Sing in Kuala Lumpur at
yliau@bloomberg.net
To contact the editor responsible for this story:
Lars Klemming at
lklemming@bloomberg.net
Thailand"s Unrest Prompts Investor Shift to Neighbors
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